Editorial: Snookered by CNOOC

Canada’s federal government surprised quite a few Canadians in early December by approving the sale of two large Western Canadian oil and gas players to two Asian governments — a decision that will have wide ramifications for future...

December 13, 2012
by Canadian Mining Journal Editor

Canada’s federal government surprised quite a few Canadians in early December by approving the sale of two large Western Canadian oil and gas players to two Asian governments — a decision that will have wide ramifications for future sales of any Canadian mining assets.

Apart from giving the nod to Petronas’ $6-billion offer for natural gas producer Progress Energy Resources, the government more controversially gave its blessing to the $15.1-billion takeover of Calgary-based Nexen — one of Canada’s largest independent oil companies — by Chinese state-owned oil giant China National Offshore Oil Corp. (CNOOC).

The Chinese government, which has replaced Saudi Arabia’s leadership over the past decade as the West’s number-one frenemy, is thus getting its hands on Nexen’s 6-billion-barrel Long Lake oil sands project in northern Alberta, plus its 7.2% stake in the Syncrude Canada mega joint venture. It’s the largest foreign takeover by the Chinese since Tibet.

In green lighting the CNOOC bid, the Canadian government, on behalf of all Canadians, is also giving its approval to the Chinese government’s appalling human rights record, as well as to China’s refusal to engage in true reciprocity in its trading relations with the West. (Is there anyone who really thinks the Chinese government would approve a similar sized takeover of an oil asset on its own territory by a Canadian private or crown corporation?)

Our modern Canadian leaders are showing moral weakness to a bully government and selling out the land under our very feet to the first foreigner who waves a few dollars around. So what else is new? It just shows how deep the colonial mentality runs in Canadian leadership circles, despite so many years of independence and prosperity. Building a country is hard — selling out is easy. We’re taking the easy route yet again.

Of course, CNOOC boosters can say that any Canadians upset about CNOOC’s ownership of Canadian oil and gas assets are quite welcome to engage in their own act of mini-repatriation by simply buying CNOOC ADRs on the New York Stock Exchange, where the stock is up 24% year-to-date and trades at an attractive price-to-earnings ratio of 9.7.

It’s difficult for ordinary Canadians to assess the CNOOC offer. Federal Industry Minister Christian Paradis said on CTV’s Question Period that the government has forced CNOOC into “significant” commitments regarding “governance, transparency and disclosure,” but then without missing a beat said he couldn’t reveal to Canadians what these commitments are for commercial reasons. This, dear readers, is high comedy.

In Canadian mining, there has been a chill on large foreign takeovers since 2010, when the federal government blocked BHP Billiton’s $39-billion offer for Potash Corp. of Saskatchewan. That refusal was mostly in response to strong opposition to the deal by the Saskatchewan premier and the prospect of losing enough Conservative seats in the province to deny the party an opportunity to achieve a majority government.

The CNOOC-Nexen deal shows that the line for approval now lies in a deal size somewhere between $15 billion and $39 billion. That means just about everything in the mining industry in Canada is up for sale again to dodgy foreign governments or other bad actors.

The debate over direct Chinese participation in Canada’s mining sector is far from over, with the HD Mining controversy in Tumbler Ridge, B.C., still raging. The first young, low wage Chinese workers have been brought into town to start prep work for the taking of a bulk coal sample — a step towards future underground mining.

B.C.’s labour unions are leading the effort to oppose the importation of Chinese labour, but the opposition is by no means universal. A large group of Canadian and other suppliers to the mining project are rallying around HD Mining, forming a loose knit group called “Friends of HD Mining,” led by Triland International and Bearisto Lehners Ketchum Engineering.

Cheap, cowed, imported Chinese labour squeezing out local workers is not just a problem for those seeking good paying resource jobs in rural B.C. and Alberta: AIM-listed London Mining is planning to fly in 2,000 Chinese to work at its proposed $2.3-billion iron ore megaproject near Nuuk in Greenland, a semi-autonomous Danish colony with a population of only 57,000, most of whom are Inuit.

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1 Comment » for Editorial: Snookered by CNOOC

I couldn’t agree more with these comments, and with Marylin Scale’s comments yesterday on the the same subject. Too bad our government hadn’t been this magnanimous when Inco and Falconbridge asked for a deal!